Wednesday, July 18, 2007

Homeowner’s Insurance

Homeowner’s insurance covers property damage to your home for any reason. It will not only cover your home, but any valuables listed on the policy, including furniture, art, jewellery, and other collectibles. It will also cover injuries to guests or others that occur on the premises.

Generally the policies are issued under two categories: Named Peril Insurance and All-risk Insurance

Named peril insurance protects only against specific occurrences described in your policy. If the policy does not list the peril, for example, earthquake, and your home is destroyed because of that peril, you will have no resource under your insurance policy. All-risk policies are comprehensive, but it is more expensive.

With either type of homeowner’s policy, you can buy Cash Value policies or Current Replacement policies. With cash value policies, the value of categories of property are set and if loss occurs, you will receive the set cash value. With a current replacement cost policy, you will receive the current replacement cost for any loss of property.

Furthermore, you can have up to 100% cash value for current replacement policies. In other words, the insurance company will pay up to a set percentage of the value of the property, depending on the terms of your insurance. Lower than 80% is not recommended.

Finally, you should have riders attached to your insurance policy to cover specific valuables such as artwork or jewellery. A rider is an addition to the insurance policy which describes a specify piece of property and states that the insurance policy specifically covers that item.


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